Productivity and per capita GDP growth: The role of the forgotten factors

Average hourly productivity has often been used to draw conclusions on long run per capita GDP growth, based on the assumption of full utilization of labor resources. In this paper, we argue that a failure to recognize the potential significant wedges among the two variables - even in the long run - can be misleading. By applying both time series and panel cointegration techniques on data on 19 OECD countries, we fail to reject the hypothesis of the absence of a long run common stochastic trend among the two variables in the period 1980-2005. Furthermore, we apply a simple decomposition of GDP growth into five variables, including some related to the supply-side and demographics, so to verify the single contributions to income growth and variance over our period of interest. We conclude that variables that have been so far absent in the growth literature indeed have a non-negligible role in explaining the dynamics of long run per capita GDP growth. In particular, these “forgotten factors” (that we identify with the employment and the activity rates and a demographic ratio) matter more in better performing economies, where we also highlight that productivity has been less important in determining GDP growth than in relatively bad performers.     

Consumption and disposable income in the EU countries: the role of wealth effects

We investigate the long run relationship between private consumption and disposable income for a sample of EU countries using recently developed panel cointegration techniques. For the ordinary consumption-income model the evidence on cointegration is ambiguous. In addition, the cointegration vector obtained by efficient estimation methods is not consistent with theoretical reasoning, as it reflects a decline in the savings rate over time. Extending the analysis by financial wealth improves the model fit markedly. In particular, the income elasticity is not different from 1 and therefore in line with the life cycle permanent income hypothesis. The marginal propensity to consume out of financial wealth is in a range of 3–5%, thereby confirming recent time series results.     

Public spending and growth: The role of government accountability

This paper examines the role of institutions in the nexus between public spending and economic growth. Empirical results based on a newly assembled dataset of 80 countries over the 1970–2010 period suggest that particularly when institutions prompt governments to be accountable to the general citizen does public capital spending promote growth. Taking account of the type of financing for this spending, we show that the growth-promoting effect under an accountable government appears to prevail for various financing sources, including a reallocation from current spending, an increase in revenue, and a rise in the budget deficit. However, government accountability does not seem to play a key role in the growth effects of current spending.     

Testing the effect of an anti-dumping duty: The US salmon market

Anti-dumping measures have been increasingly common. When imposed, the measures will always reduce trade with named countries. Depending on market structure, there can also be price effects and increased imports from non-named countries. In this paper we investigate relationships between prices to obtain information about the market structure. Using only prices will in many cases be an advantage because of the greater availability of price data. An empirical example is provided using the US case against Norwegian salmon. First version received: April 1999/Final version received: May 2000     

The evolution of stock market efficiency in the US: a non-Bayesian time-varying model approach

A non-Bayesian time-varying model is developed by introducing the concept of the degree of market efficiency that varies over time. This model may be seen as a reflection of the idea that continuous technological progress alters the trading environment over time. With new methodologies and a new measure of the degree of market efficiency, we examine whether the US stock market evolves over time. In particular, a time-varying autoregressive (TV-AR) model is employed. Our main findings are: (i) the US stock market has evolved over time and the degree of market efficiency has cyclical fluctuations with a considerably long periodicity, from 30 to 40 years; and (ii) the US stock market has been efficient with the exception of four times in our sample period: during the long recession of 1873–1879; the recession of 1902–1904; the New Deal era; and the recession of 1957–1958 and soon after it. It is then shown that our results are partly consistent with the view of behavioural finance.     

Cointegration relationships and hedonic pricing of differentiated commodities: an application to price dynamics in the US dairy sector

This study investigates the implications of hedonic pricing for price dynamics of differentiated commodities. A conceptual model of hedonic pricing is developed under a Leontief technology, showing how commodity prices reflect the underlying value of their components. Implications for the existence of cointegration relationships among commodity prices are derived. An application to the pricing and dynamics of selected US dairy commodities is presented. It provides evidence on the role of component valuation in the dynamics of dairy commodity prices in the short run as well as in the long run. Distinguishing between market regime and government regime (when the government price support is active), the analysis finds significant differences in dairy price dynamics between the two regimes.     

The role of domestic demand in the economic growth of Malaysia: a cointegration analysis

For the past four decades (1961-2000), the Malaysian economy grew at an impressive average rate of 6.8% per annum. The rapid growth has been attributed, in part, to the tremendous success in the export-oriented industrialization policy. Several empirical studies on export-led growth for Malaysia have, however, led to inconclusive and mixed results. This may be due to the exclusion of domestic demand in the bivariate or multivariate models used in the studies. This study re-examines the role of domestic demand in economic growth in Malaysia. Using a three-variable cointegration analysis, the study shows that there exist short run bilateral causalities among the three variables, which implies that both the export-led growth and domestic demand-generated growth hypotheses are at least valid in the short run. On the other hand, the results are not supportive of the export-led growth hypothesis in the long run. Instead, the highly significant positive impact of domestic expenditure on economic growth implies that use of domestic demand as the catalyst for growth is appropriate.     

The role of ageing in the growth of government and social welfare spending in the OECD

Government expenditure as a share of GDP in the OECD rose at an annual growth rate of 1.02% in the period between 1970 and 1997. Government spending has increased most on functions particularly demanded by elderly population: social welfare, health and defence. Ageing is the main driving force of the growth of government spending, followed by relative prices and population. However, we also find that the other age groups react to ageing, thereby preventing increases in benefits per retired persons and that institutional reforms have been successful at reducing the impact of ageing on pensions in recent years.     

农民首创与政府引导:农村土地制度改革30年思考

回顾农村土地制度改革30年的历程.本文认为可以分成"因穷求变"和"为富求变"两个阶段.其中农民首创与政府引导结合所形成的合力是改革最重要的推动力.改革之所以能够成功就是因为我们坚持"解放思想,实事求是"的思想路线.尊重农民的主体地位和首创精神,坚持政府的规范和引导.遵循市场经济的规律.     

Financial constraints and investment: assessing the impact of a World Bank credit program on small and medium enterprises in Sri Lanka

Abstract.  This paper examines the investment behaviour of a sample of small, credit-constrained firms in Sri Lanka. Using a unique panel data set, we analyze and compare the activities of two groups of small firms distinguished by their differential access to financing; one group consists of firms with subsidized loans from the World Bank, while the other group consists of firms without such subsidies. The paper shows that the program led to higher levels of investment for financially constrained firms. However, the evidence is inconclusive on whether the program improved economic efficiency.     

Growth effects of FDI in 80 developing economies: the role of policy reforms and institutional constraints

Theoretical and empirical literatures have identified several channels through which foreign direct investment (FDI) influences economic growth. This paper examines the impact of FDI on economic output growth per worker using aggregate production function augmented with FDI inflows, economic policy reforms and institutional constraints. The paper covers 80 developing countries over the period 1980–2006. We use panel data and employ fixed, random effects and GMM methods for estimation. Our results highlight the importance of FDI, policy reforms and institutional development for growth in developing economies. Finally, we demonstrate that irrespective of reforms and institutions, an increase in FDI affects output growth positively.     

Intertemporal substitution in import demand and the role of habit formation: an application of Euler equation approach for Pakistan

Introduction

The study examines the importance of intertemporal substitution in import demand considering the role of habit formation. A two-goods version of the permanent income model is used in which time-non-separability in consumers’s preferences is assumed. The model is estimated using annual data for Pakistan at disaggregated level covering the period from 1977 to 2017.

Objectives

The objective of the study is to estimate elasticities of substitution along with parameters of habit formation for consumption goods at a disaggregated level.

Method

The study employs co-integration for the estimation of parameters of elasticities of substitution and generalized method of moments (GMM) for the estimation of the parameters of habit formation from Euler equations.

Findings

The estimates of intertempral elasticity of substitution suggest that the nature of commodity group (necessity/luxury) plays an important role when consumers are making intertemporal choices. Moreover, the study finds that intratemporal elasticity of substitution is larger than intertempral elasticity of substitution in almost all cases in Pakistan, suggesting that imported and domestic goods are best described as substitutes in Edgeworth-Pareto sense. In addition, the inclusion of habit formation delivers results with plausible signs and the habit formation process seems significant for certain commodity groups including tea, beverages, tobacco products and drugs.

Conclusion

The study concludes that there is a possibility of crowding out effect on domestic consumption and the depreciation of local currency may improve Pakistan’s balance of trade.

     

A naturalistic approach to the theory of the firm: The role of cooperation and cultural evolution

One reason why firms exist, this paper argues, is because they are suitable organizations within which cooperative production systems based on human social predispositions can evolve. In addition, we show how an entrepreneur, given these predispositions, can shape human behavior within a firm. To illustrate these processes, we will present a model that depicts how the biased transmission of cultural contents via social learning processes within the firm influence employees’ behavior and the performance of the firm. These biases can be traced back to evolved social predispositions. Humans lived in tribal scale social systems based on significant amounts of intra- and even intergroup cooperation for tens if not a few hundred thousand years before the first complex societies arose. Firms rest upon the social psychology originally evolved for tribal life. We also relate our conclusions to empirical evidence on the performance and size of different kinds of organizations. Modern organizations have functions rather different from ancient tribes, leading to friction between our social predispositions and organization goals. Firms that manage to reduce this friction will tend to function better.     

Growth and financial liberalization under capital collateral constraints: The striking case of the stochastic AK model with CARA preferences

We consider a small-open, collateral-constrained AK economy. We show that the combination of CARA preferences and uncertainty on capital inflows generates long-term growth while the deterministic counterpart does not: long-term growth is entirely driven by precautionary savings, and the asymptotic growth rate of the expected capital stock is increasing in both the risk magnitude and the Arrow–Pratt absolute risk aversion parameters.     

The new right and the US economy in the 1980s: an assessment of the economic record of the Reagan administration

This paper discusses the new-right ideas underlying the victory and implementation of ‘Reaganomics’ and examines the economic record of the Reagan administration. Given the preeminence of supply-side economics in the USA in the 1980s, and the supply-side leanings of the Reagan government, attention is focused mainly upon supply-side ideas, policies and claims: although some assessment of monetarist propositions is also provided. In addition to the evaluation of new-right claims, however, a broader assessment of the Reagan administration's record is also undertaken which deals, inter alia, with inflation, growth, unemployment and the ‘twin deficits’. Within this evaluation the social impact of Reaganomics is highlighted as a counterpoint to the claimed economic successes of the Reagan years.     

The legacy and promise of Vannevar Bush: rethinking the model of innovation and the role of public policy

The linear model of innovation argues that innovation takes place in a unidirectional sequence, with basic research directly diffusing in marketable product or process innovations. This perspective has served society well in past decades. However, recent productivity slowdowns in developed economies and the failure of innovation policies to continue to deliver desired results have called this perspective into question. Scholars explain these slowdowns by the oversimplification of the linear model which fails to consider the complexities associated with innovation processes. Although it is generally believed that Vannevar Bush’s report Science – The Endless Frontier – was based on his belief in a linear model of innovation and the notion that basic research is the ultimate source of all innovation, an examination of Bush’s writings and his life reveals that he believed in a more sophisticated model in which basic and applied research cross-fertilize each other and in which government’s job is not so much to stimulate basic research as it is to facilitate interactions between basic and applied research for the benefit of both and the prosperity of society. This paper explicates Bush’s model of the research and innovation process, explores the implications of that model, and derives policy recommendations.     

FDI与产业集聚的互动——中国农产品加工业视角

本文基于传统贸易理论、新贸易理论、新经济地理理论,对FDI与产业集聚的相互关系进行理论探讨。在此基础上,运用面板误差修正模型以及格兰杰因果检验原理对FDI与中国农产品加工业集聚的关系进行实证分析。结果发现,FDI既是推动农产品加工业集聚形成的短期原因,也是影响农产品加工业集聚发展的长期因素,而产业集聚则不是FDI进入农产品加工业的原因。     

省直管县改革对县域公共物品供给的影响——基于河北省136县(市)面板数据的实证分析

基于河北省136个县(市)2003～2007年的相关社会经济数据,文章建立面板数据实证分析了省直管县改革对县域公共物品供给的影响。研究发现,省直管县改革在显著提高县域生产性公共物品供给水平的同时,显著降低了县域服务性公共物品的供给水平;而且除人口规模外,省直管县改革对县域公共物品供给的影响关系并不会受到县域环境因素的影响。     

The Swedish third way: an assessment of the performance and validity of the Rehn-Meidner model

This paper analyses the functioning of the Rehn–Meidnermodel in Sweden and the validity of the model's underlying theory.Both sceptics and friends of ‘the Swedish model’have exaggerated the effects of active labour market policyand solidarity wage policy on employment, inflation and growth.However, these policies have contributed to the reduction ofhysteresis effects and wage differentials in Sweden. Furthermore,Swedish experiences confirm the Rehn–Meidner view thatpositive demand shocks and expansionary macroeconomic policiesmake it difficult to combine full employment with price stability,economic growth and equity even if central wage negotiationsare coordinated and trade unions willingly accept wage restraint.